State GOP leaders seek to limit property tax hikes

Asher Price @asherprice Julie Chang @JulieChang1

Thursday

Jan 31, 2019 at 11:25 AMJan 31, 2019 at 5:49 PM

The top three power-brokers at the Texas Capitol — Gov. Greg Abbott, Lt. Gov. Dan Patrick, and House Speaker Dennis Bonnen — announced Thursday they had agreed to push for legislation that would place strict limits on how much school districts, cities and counties can collect in local taxes.

Identical bills filed in the Texas House and Texas Senate on Thursday would require voters to approve property tax increases that lead to collections of more than 2.5 percent in revenue from the previous year.

Rep. Dustin Burrows, chairman of the House Ways and Means Committee, joined the top Republicans in a press conference Thursday morning to announce the identical bills.

"This is the three things it does: it ensures the slowing of the rate of property tax increases, it empowers citizens with an automatic vote so they can say no to excessive property tax increases, and it also ensures we know who are raising our property taxes," the Lubbock Republican said over the phone Thursday. "We've got a transparency component and we're empowering citizens to tackle a problem I hear about as much as any."

The bills also require local governments to provide property owners with a plain language comparison to the rate they are proposing, so taxpayers can more easily see the difference in what they paid last year versus the present year.

The cap would not apply to the smallest taxing units — ones with less than $15 million in combined property and sales tax revenue.

Pledging to rein in property taxes has become a popular refrain at the GOP-controlled Capitol, but many local government and school district officials say doing so would severely hamper their ability to repair potholes and pay teachers, among thousands of other expenditures.

Several Lubbock County Commissioners went to Austin last year to testify against the state lowering the rollback rate. County judges from many of the rural counties around Lubbock also spoke against the bill, saying it handcuffs growth and isn't plausible with such fluctuating budgets. The last time the City of Lubbock did not experience a budget increase of over 2.5 percent was in the 2009-10 budget.

Lubbock Mayor Dan Pope released a statement Thursday saying the city will work with the Lubbock area state delegation and the entire Legislature for meaningful reform.

"I think all of us would prefer to pay lower property taxes," Pope said. "Providing for public safety, transportation and basic city services will remain our focus. Our Lubbock City Charter directs us to this work. The citizens of Lubbock elected us to do this job. This charge will remain job one as we work with state leadership on this important initiative

Classrooms are at the center of the tug-of-war over property taxes.

With Texas cutting money to fund schools — a decade ago, the state provided 48.5 percent of education funding, compared to 38 percent this year, according to the Legislative Budget Board — districts have increasingly turned to local property tax revenue.

Burrows said this property tax reform needs to go hand-in-hand with school finance reform.

"This bill is part of a two- or three-step solution," Burrows said. "The House budget has set aside significant dollars for our school districts to make sure they're adequately funded. We are committed, I am committed, to making sure that happens."

The House last month proposed increasing discretionary spending for public education by $7.1 billion; the Senate proposed calls for an increase of $4.3 billion, most of which would go toward a plan to give all Texas teachers a $5,000 salary increase. It's not clear how much of the extra education dollars will go to fund the declines in districts' local revenue as a result of the property tax relief plan, and how much of it is to increase the overall funding for schools.

Although state leaders have said that school districts would not be harmed financially by a property tax relief plan, officials have not yet said how they would find the extra state money beyond general revenue.

"We're very confident in the governor's plan of 2.5 percent that we will pass it, we will find the funding to fund it and we already have many ideas along those lines," said Patrick on Thursday.

Burrows said the House will hear all view points when discussing this bill in the House Ways and Means Committee. He said everyone will have a seat at the table, and he said he looks forward to seeing how the bill looks several months from now.

Concerns about a steady source of revenue for the property tax relief plan, hence schools, permeated through the public education community on Thursday.

"Because more than 400 school districts are already taxing at the maximum rate allowed by the state, capping property tax revenue without identifying additional, consistent sources of funding could be devastating to Texas students," said Dax Gonzalez with the Texas Association of School Boards.

Multiple education groups have told the Statesman that they fear the tax relief plan could be a repeat of 2005 when the Legislature had compressed school property tax rates and created a new business tax to pay for it. The swap fell short and the plan led to a $5.4 billion cut to public education in 2011.

Last year, Abbott's office and Bettencourt had suggested using severance taxes from oil and gas production to fund property tax relief and school funding. However, Comptroller Glenn Hegar has said multiple times that using such revenue is volatile.

Some property owners have looked to their lawmakers to ease their annual tax bill pain.

Two years ago, Patrick pushed a Senate plan that would have required cities, counties and school districts to win voter approval before increasing property taxes by more than 4 percent. (Currently, state law allows local governments to raise taxes 8 percent before they can be forced by petition to hold an election.) A 2017 Texas House plan would have required a vote on property tax hikes of more than 6 percent. The proposals died when the chambers couldn’t agree on a final figure.

Then, in 2018, Abbott proposed limiting annual growth to 2.5 percent — while also increasing state funding for schools. He hasn't offered suggestions on how to pay for the plan, saying he would leave such details to lawmakers.

The 2.5 percent figure "came from the governor," said state Sen. Paul Bettencourt, R-Houston, who chairs the Senate Committee on Property Tax.

"With the House at 6 and Senate at 4, he was going to compromise with 2.5," he continued with a laugh. "And that’s called real leadership."

Democrats on Thursday said lawmakers should do a better job funding schools to relieve school districts from levying ever-higher taxes.

“Property taxes are too high because the state of Texas has relied on rising school property taxes to balance the state budget,” said state Rep. Chris Turner of Grand Prairie, and who chairs the House Democratic Caucus. “The state must reform public school finance — first, because it’s critically important to the success of 5.4 million Texas school children and second, because it is the only real way to relieve property taxes.”

The bills filed Thursday also:

• Require local governments to provide property owners with a plain language comparison to the rate they are proposing, so taxpayers can see how their new bill will compare to last year’s.

• Creates a property tax advisory board in the Office of the Comptroller to make recommendations to “improve effectiveness and efficiency in the property tax system, making it easier for Texas citizens to take a more active role,” according to a news release from Bonnen’s office.

• Expands opportunities for property owners to protest or appeal their appraisal value through after-hours protests and requires notices from appraisal districts to be issued electronically.

On Thursday, taking a thinly-veiled jab at former speaker Joe Straus, with whom he famously did not get along, Patrick credited Bonnen’s ascendancy to the speakership with opening the way to a property tax deal.

“This shows what happens when you have team work,” Patrick said.

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